23 rd December Initiating Coverage. Q4 FY17 Earnings Update

Transcription

1 23 rd December 2017 Initiating Coverage Q4 FY17 Earnings Update

2 Disclaimer The information contained herein is obtained from sources believed to be reliable. Guiness Securities Ltd is not responsible or liable for any profit/loss resulting from our research advises or recommendations. Investors are advised to use their own judgment while taking any investment decision. Guiness Securities Ltd does not bear any responsibility for the authentication of the information. Guiness securities Limited and its connected companies, and their respective Directors, Officers and employees, may, from time to time, have a long or short position in the securities mentioned and may sell or buy such securities. Prepared by: Guiness Research Team SEBI Registration (Research Analyst) Number:INH Contact No: , research@guinessgroup.net

3 Company Overview Bliss GVS is a fast-growing Pharmaceutical Company with a proven track record of developing, manufacturing and marketing high quality pharmaceutical formulations at affordable prices for the global market. Details Particulars Shareholding Pattern as on 30 th September 2017 Current Price ` NSE Symbol BLISSGVS BSE Code Others 32.11% Market Cap Face Value ` 2215 cr ` 1.00 Per Equity Share DIIs 0.48% FII/FPI 7.25% Promoter 60.16% 52 Week H/L ` 220 & ` Equity ` cr Reserves ` cr Recommendation Accumulate Target Price ` 330 Source: BSE/NSE

4 Company Overview Bliss GVS is among the world leaders in Suppositories and Pessaries dosage forms with one of the largest portfolios in this segment. Brand Leader in Anti-malarial products across most African markets. Contract-manufacturer for leading players like Sanofi, Sun Pharma, Alkem, Mankind and Intas. Diverse Product Portfolio: 250+ products across 20 therapeutic areas like Anti-malarial, Women s Health and Gastro-Intestinal & 16 dosage forms. Strong Global Presence: Operations in more than 64 Countries across globe including Romania, Russia, Middle East, Africa & CIS, Latin America & South Asian Countries. State of Art Manufacturing Facilities and R&D Capabilities: 3 Manufacturing Units in Palghar, 1 each in Thane and Daman. Bliss GVS follow European GMP Standards for manufacturing suppositories. Manufacturing plants are cgmp compliant by local and international standards: EU GMP, WHO GMP, OHSAS : 2007 and ISO : Bliss GVS is the only EU-GMP certified suppositories and Pessaries manufacturer in India. Source: Company Website / Presentations

5 Timeline Opening of UK subsidiary for expansion in Europe. Commissioning of 3rd manufacturing plant for oral solid & dry powder. Opening of 15 + Diagnostic centre / Clinics in East Africa. Launch of super specialty Hepatitis C products. Commissioning Soap Manufacturing Facility at Nigeria. EU-GMP approval for Suppositories and Pessaries manufacturing facility at Palghar. Entry into Russia and other CIS markets followed by series of Acquisitions across product lines to enhance global presence. Approval of six Health Authorities for Tablets & Dry Syrup Manufacturing units Commissioning of new state-of-art manufacturing facility at Palghar Merger of GVS Labs with Bliss Chemical & Pharma Commissioning of manufacturing units for Tables & Dry Syrup at Palghar Launch of flagship and unique product "Today" Vaginal Contraceptive. Incorporation of Bliss Chemicals & Pharmaceuticals India Ltd. Source: Company Website / Presentations

6 Group Structure Bliss GVS Pharma Ltd. (India) Bliss GVS International Pte. Ltd. Singapore (100%) Bliss GVS Clinic Healthcare Pte. Ltd. Singapore (100%) Asterisk Lifesciences Ltd. London U.K. (100%) Kremoint Pharma Pvt. Ltd. 70% Greenlife Bliss Health Care Ltd. Niegeria Bliss International Pte. Ltd. - (51%) Bliss GVS Health Care Ltd. Kenya Nairobi Bliss GVS Clinic Healthcare Pte. Ltd. - (51%) Asterisk Lifesciences (GH) Ltd. Ghana (100%) Eipii Exports Pvt. Ltd. Kremoint 100% Source: Company Website / Presentations

7 About Promoters More than 35 years of experienced in Pharmaceutical industry and Export market Honoured with National Award by Government of India twice in Row (2009 and 2010) Mr. S. N. Kamath Promoter & Managing Director A Veteran with over 30 years of experience in trading of Foreign currencies and precious metals, banking finance and foreign exchange. He was member of Foreign Exchange Brokers Association of India. Mr. Guatam Ashra Promoter & Non- Executive Director Research & Development activities and dentist by profession Bachelor of Dental Surgery (BDS) Dr. Vibha Gagan Sharma Promoter & Whole Time Director Trading & marketing in Pharmaceuticals Qualification: B. E. Mrs. Shruti Vishal Rao Promoter & Whole Time Director Source: Company Website / Reports

8 Brief Overview of African Market Industry Overview Africa - 2 nd World s Second fastest growing pharmaceuticals market. Market growing at CAGR of 10.6%, Africa comes second only to Asia Pacific region 10.5% Expected to reach market size of INR 2.9 trillion by 2020 Pharmaceuticals sales in Africa s Top & high growth markets includes Nigeria (13%) and Kenya (17%); together these countries accounted for INR 168 billion Current Trend of greater investment by pharmaceutical companies in manufacturing facilities in Middle East and Africa. According to BMI, global pharmaceutical market is expected to record a 2.6% CAGR between 2016 and 2020, whereas Middle East North Africa (MENA) region s pharmaceutical market to post CAGR of 8.3% between 2016 and 2019 with Middle East sub-region posting 8.2% CAGR and the North Africa sub-region experiencing a 8.5% CAGR in the same period. In comparison, the Sub-Saharan Africa (SSA) region s pharmaceutical market is projected to post a CAGR of 6.9% between 2016 and 2019 with the West Africa subregion posting a 7.3% CAGR and the East and Central Africa sub-region posting a 8.4% CAGR in the same period Infusion of Global fund like USAID, PEPFAR etc. will contribute to Africa pharmaceutical industrial growth - resulting in support to BGPL to grow in African market Source: Company Website / BMI Research

9 Business Overview Pharmaceuticals Healthcare In business of Developing, manufacturing and marketing pharmaceuticals formulations to over 64 countries. Brand leadership across selected segments in Sub-Saharan Africa (SSA) markets. Niche Expertise in developing and manufacturing of Suppositories. Provide outpatient and diagnostic healthcare services to East African markets. Largest and Fastest growing healthcare chain in Kenya. 80,000+ patients treated every month. Source: Company Website / Annual Reports

10 Investment Rationale Strong Product Portfolio Presence in High Growth Market Largest and fastest growing Healthcare chain in Kenya. Niche expertise in Suppositories & Pessaries Strong R&D Capabilities, Sales & Distribution Network Significant expansion plans in R&D & Mfg & capabilities Source: Annual Report / Guiness Research

11 Largest & Fastest growing Healthcare chain in Kenya Bliss GVS Healthcare Limited (BGHL) is the preferred provider of managed healthcare services in Kenya. BGHL ventured into the Healthcare segment with the launch of 10 medical centers in 2013 in Kenya. In a short span of five years, BGHL has emerged as the largest and fastest growing Healthcare chain in Kenya. The Company currently has over 80 clinics treating over 80,000 patients every month. The Company is firmly on track to increase its presence and outreach, touching the milestone number of 100 clinics in the coming year. Source: Annual Report / Guiness Research

12 Niche expertise in suppositories & Pessaries Bliss GVS is among the top players in the niche category of Suppositories and Pessaries dosage forms. With over three decades of experience and expertise, the Company evolved into an end-to-end solution provider from formulation to commercialization. The Company has expanded its Suppositories and Pessaries footprint into over sixty countries in the last ten years and is a contract-manufacturer for leading players like Sanofi, Sun Pharma, Alkem, Mankind and Intas. Pharma Products Applications Source: Annual Report / Guiness Research

13 Brand leaders in Anti-Malarials Bliss GVS - Only company that offers WHO recommended treatment options across dosage forms Source: Annual Report / Guiness Research

14 Pharma Product Portfolio - Global Bliss GVS - Only company that offers WHO recommended treatment options across dosage forms Product by Dosage Forms Tablets Suppository & Pessary Oral Suspension Dry Syrup Syrups Sachet Capsules Injectable Creams & Ointments Ophthalmic Solution Gels Liquids Lotions Inhalers Lozenges Cosmetics Sanitary Items Key Dosage Forms Key Therapeutic Segment Therapeutic Segments Anti Malarial Antifungal & Anti Bacterial Anti Inflammatory Antibiotic Antipyretic Women s Health Supplementary Drug Laxatives Cold and Cough Antiulcer Anti Haemorrhoidal Erectile Dysfunction Anti Spasmodic Antidiabetic Source: Annual Report / Company Presentation

15 Source: Annual Report / Guiness Research Key Customers

16 State of Art Manufacturing Facilities Unit 1 Location: Palghar, Maharashtra Certification: WHO-GMP Approved Capacity: 1) Suppositories & Pessaries 55 million units/annum 2) Tablets 250 million units/annum 3) Dry Syrup 6 million units/annum Unit 2 Location: Palghar, Maharashtra Certification: EU-GMP (PIC/S approval), WHO-GMP approved Capacity: Suppositories & Pessaries 200 million units/annum Unit 3 Location: Palghar, Maharashtra Certification: WHO-GMP Certified Capacity: 1) Suppositories and Pessaries 86.4 million units/annum 2) Sachets 21.6 million units/annum Apart from this Bliss GVS has two more operational facilities in Daman & Thane (both are WHO-GMP Approved). The sixth unit will be commissioning soon in Palghar. As of now, Total Installed Capacity is 675 Million. Source: Annual Report / Guiness Research

17 Strong Research & Development capabilities Dedicated R & D Centre for development of Suppositories, Semi Solids and Oral Solids. Experienced Team of Scientists for formulation development and analytical method development. Over 40 experience team of professionals. Certified by Department of Scientific & Industrial Research (DSIR), Government of India. Source: Annual Report / Guiness Research

18 Source: Annual Report / Guiness Research Strong Global Presence

19 Financial Performance & Valuation

20 Source: Annual Reports Figures in Rs Lakhs

21 Source: Annual Reports Balance Sheet Highlights

22 Source: Annual Reports Key Financial Trends: Last 5 Years

23 Consolidated Half Year Financial Highlights Rs. Crores H1 FY18* H1 FY17* GROWTH (YoY%) Total Revenue*(net off Excise Duty) % Raw Materials Employee Cost Other Cost Total Expenditure EBITDA % EBIDTA margin (%) 24.70% 26.53% Other Income Depreciation Interest Profit Before Tax % Tax PAT % PAT Margin (%) 16.92% 15.71% +121 bps EPS (Rs.) % *Total Revenue is net off Excise duty and it is as per Ind AS Source: Company Results / Guiness Research

24 *As per Ind AS Cons. Balance Sheet as on September 30, 2017 Rs. Crores As on Sep-17* Total Shareholders' Fund Equity Share Capital Other Equity Non Controlling Interest Total Non Current Liabilities Financial Liabilities Borrowings Other Financial Liabilities 0.00 Provisions 2.11 Deferred Tax Liabilities (Net) Other Non Current Liabilities 0.37 Total Current Liabilities Financial Liabilities Borrowings Trade Payables Other Financial Liabilities 8.55 Provisions Current Tax Liabilities Total - Equity and Liabilities 1, Source: Company Results / Guiness Research Rs. Crores As on Sep-17* Total Non Current Assets Property Plant & Equipment Capital Work in Progress 6.70 Investment Properties 0.86 Goodwill Intangible Assets 6.45 Financial Assets Investments 0.01 Loans Other Financial Assets 6.52 Other Non Current Assets Total Current Assets Inventories Financial Assets Trade receivables Cash & Cash equivalents Other Bank Balances Loans 8.34 Other Current Assets Total Assets 1,149.92

25 Financial Highlights H1 FY18 v/s H1 FY % Total Revenue* Rs cr 36.1% EBTIDA Rs cr 57.4% PAT Rs bps PAT Margin 16.9% 41.5% EPS in Rs.7.7 Vs 5.5 (FY16) *As per Ind AS Source: Company Results / Guiness Research

26 Earnings Projection & Valuation Figures in Rs cr The valuation of Bliss GVS is attractive and is expected to remain so as it is a secular defensive play in Pharma Space- No exposure to Regulated markets, rather concentrated in Growth Markets- Africa. The stock is trading at P/E(x) of 16.5 times of its trailing earnings of 13. Maintain Accumulate with TP of INR 333 (discounting the stock to trade at 19 times of its FY19E EPS / Upside Potential: 53.5%). Use corrections till 200 as good entry levels for investors as medium term growth prospects remains broadly intact for the stock due to stable earnings visibility. Key Concerns: Potential risks and uncertainties include factors such as general economic conditions in African market (Forex risk), competitive product and pricing pressures due to regulatory developments. Source: Guiness Research

27 Technical Check Key Support Levels 20 EMA DMA DMA DMA 172 Source: Guiness Research

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